Product Tanker Shipping Faces Cargo Decline From Hormuz Closure
Summary
TORM and Imperial Petroleum told Q2 calls that refineries east of Suez cannot get Gulf crude, so product tanker cargo is shrinking even as earnings hit records.
On their second-quarter earnings calls on August 26 and September 10, 2026, TORM plc (TRMD) and Imperial Petroleum Inc. (IMPP) both said that refineries east of Suez cannot get Middle East crude, that their refined-product exports have fallen, and that there is therefore less cargo available for product tankers to lift [1][2]. Both companies reported record quarters. TORM's third-quarter bookings secured to date averaged $38,600 per day, below the second-quarter fleet average of more than $59,000 per day [1].
Why a refinery's crude supply decides whether a product tanker has cargo
Product tanker demand starts at the refinery gate. Crude tankers move crude oil from the producing field to the refinery; product tankers move the gasoline, diesel and jet fuel the refinery makes to where it is consumed. The most numerous product tankers are mid-size MR and Handysize vessels, and their cargo comes mainly from arbitrage trade: a refinery has to produce more than its local market consumes before the surplus is loaded for export.
The Strait of Hormuz is the only sea route out of the Gulf for that crude and those products, and the closure has cut the chain at its starting point. Flows through the Strait fell to roughly 2 million barrels per day from 8-9 million [3], and Gulf production itself is contracting [4]. Refineries east of Suez run less and export less, which removes part of the product tanker cargo base directly. The replacement barrels come from the Atlantic, with US Gulf crude and products sailing a longer route to Asia. That stretches ton-miles while the tonnage actually loaded keeps falling.
Third-quarter bookings already show the split between crude and clean
TORM's current profits and its forward bookings point in different directions. The owner operates 97 product tankers and booked $512 million of TCE revenue and $338 million of net profit in the second quarter, raising the midpoint of its full-year TCE guidance from $1.3 billion to $1.5 billion [1]. On the same call it disclosed that third-quarter bookings secured to date averaged $38,600 per day across vessel classes [1]. Management set out the condition for cargo to return: crude arriving at refineries has to meet or exceed local daily consumption again before the arbitrage trades reopen [1].
Imperial Petroleum put a sharper number on the same split. It reported record revenue of $87.1 million and net income of $34.8 million, with tanker earnings near $71,500 per day [2]. Its own rate comparison runs from about $29,000 per day for product tankers at the end of the second quarter of 2025 to about $31,000 at the end of the second quarter of 2026, while Suezmax crude tankers went from about $38,000 to above $145,000 over the same period [2]. Management attributed the weakness on the clean side to regional refiners being short of Middle East crude, and warned that a prolonged closure would leave the market short of cargoes and could hurt rates [2].
Upstream production data matches that explanation. OPEC's September report showed Saudi Arabian crude output down 1.9 million barrels per day month-on-month to 6.238 million, the lowest since 1990, and the same report cut its 2026 global demand growth forecast for the fifth consecutive time, to about 400,000 barrels per day [4].
The variable that sets product tanker revenue is shifting from distance to volume
The pricing logic for these owners is changing which variable it rests on. For two years it was distance: rerouting lengthened ton-miles, rates rose, and owners converted that into spot earnings and high dividends. With the closure running longer, refinery utilization and exportable volume are what decide revenue, and neither sits inside an owner's control. The supply-side argument for product tankers — a small order book relative to the fleet and an aging fleet — describes capacity, and does not answer whether cargo exists to carry. China's refined-product imports for the first eight months of the year fell to 22.15 million tonnes from 26.73 million a year earlier [5], which is the loaded cargo itself shrinking.
There is a serious reading of the same data that goes the other way. Inventories drawn down during the conflict eventually have to be rebuilt, and TORM itself estimates that restocking adds 1-2% to global trade volumes over twelve months [1]. China's July crude imports rebounded 22% month-on-month to 8.45 million barrels per day [6], and Gulf producers have been restoring exports through the Strait since late August [7]. If flows recover, the missing cargo has been deferred rather than destroyed. The indicators to watch are the next quarter's booked day rates and coverage disclosed by product tanker owners, and crude arrivals at the major importers east of Suez.
Companies exposed to this change
- Ardmore Shipping (ASC): Operates only MR product tankers and chemical carriers, with no crude or large product tanker leg to offset them, so a change in cargo volume east of Suez passes through to its spot earnings in full.
- Hafnia Limited (HAFN): Owns 103 product tankers and manages about 60 more, making it the largest listed product tanker owner, with cargo concentrated in refined-product exports east of Suez and exposed to the same volume gate described above.
- Valero Energy (VLO): A US Gulf Coast refiner running about 3.0 million barrels per day on crude that never transits Hormuz; the US Gulf-to-Far East product cargoes substituting for Middle East exports originate at this end, so its export pace maps directly onto the tankers' replacement cargo.
Sources
[1] Drillr · TORM plc (TRMD) · 2026-08-26 · FY2026 second-quarter earnings call
[2] Drillr · Imperial Petroleum Inc. (IMPP) · 2026-09-10 · Q2 2026 earnings call
"We did witness a weaker activity East Of Suez as the regional refiners were in shortage of Middle East crude hence, had less CPP to export."
[3] EconoTimes · Rystad Energy data · 2026-09-10 · news · http://www.econotimes.com/Iran-Attacks-10-Ships-as-Hormuz-Conflict-Escalates-1751720
[4] Sina Finance · OPEC Monthly Oil Market Report · 2026-09-10 · institutional report · https://finance.sina.cn/7x24/2026-09-10/detail-inirkcsk8523767.d.html
[5] Sina Finance · China General Administration of Customs refined-product import data · 2026-09-08 · statistics · https://finance.sina.cn/7x24/2026-09-08/detail-inirapyy9291882.d.html
[6] Yahoo Finance · China customs crude import data · 2026-08-11 · news · https://finance.yahoo.com/energy/articles/china-teapot-refiners-poised-ramp-093000992.html
[7] The Business Times · Hormuz oil flows rising as Gulf giants' ramp gathers pace · 2026-08-28 · news · https://www.businesstimes.com.sg/international/hormuz-oil-flows-rising-gulf-giants-ramp-gathers-pace